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NEWSROOM for April 19, 2000Aired April 19, 2000 - 4:30 a.m. ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: Seen in classrooms the world over, this is CNN NEWSROOM.
TOM HAYNES, CO-HOST: We get down to business for your Wednesday edition of NEWSROOM. I'm Tom Haynes.
SHELLEY WALCOTT, CO-HOST: And I'm Shelley Walcott. Today, making a living, from the streets of Iraq to the fields of Zimbabwe.
HAYNES: That's right, we also discover the earning potential in cyberspace.
WALCOTT: Farmers in Zimbabwe battle for prime land. We'll look at how the politics of color is shaping the standoff.
HAYNES: So far, Uncle Sam has kept his hands off cyber sales. In "Business Desk," find out why he may be cyber-salivating.
(BEGIN VIDEO CLIP)
MAYOR RON KIRK, DALLAS, TEXAS: The Internet shopper still needs public schools and public roads and police and fire protection.
(END VIDEO CLIP)
WALCOTT: And from the fiscal freedom of the Internet, to the business barriers in Iraq: making a deal, in an era of sanctions.
(BEGIN VIDEO CLIP)
PIETRO ZANPERIN, ITALIAN BUSINESSMAN: We are here now because we think that the time has come that the embargo will go away.
(END VIDEO CLIP)
HAYNES: Then, "Chronicle" looks at how a young Iranian businessman has set up shop in cyberspace, and is reaping the rewards of American enterprise.
(BEGIN VIDEO CLIP)
FARHAD MOHIT, CHAIRMAN & CO-FOUNDER, BIZRATE.COM: What we do is we sit on the point of sale of over 3000 vendors on the Web, letting every single customer tell us what they think about their experience. (END VIDEO CLIP)
HAYNES: In today's top story, Zimbabwe's 20th anniversary of independence from white rule is being marred by racial violence. Black gunmen have taken over hundreds of white-owned farms in the country, killing at least two ranchers. And so far, the Zimbabwean government is doing little to stop the pillaging. In fact, it may be fanning the flames.
In a speech yesterday, President Robert Mugabe told his nation that white farmers are enemies who want to reverse the country's independence.
Zimbabwe is a landlocked country in Southern Africa. While under British rule, the territory was called Rhodesia. But that changed after the nation's black majority achieved freedom from white minority rule on April 18, 1980.
Land has been an emotional issue in Zimbabwean politics since then. That's because white landowners make up a tiny percentage of the population, but own 75 percent of the most productive land. The recent, illegal takeover of white-owned farms in Zimbabwe started in February. The siege is being led by a group of former war veterans. White Zimbabweans looking to their government for support are not finding much help.
President Mugabe is supporting legislation that would allow white farmer's land to be seized without compensation. Political experts say opposition to Mugabe's 20-year rule is growing. They say the embattled president is trying to garner support by allowing black squatters to invade white farms.
With more, here's Bob Coen.
BOB COEN, CNN CORRESPONDENT (voice-over): President Robert Mugabe chose a liberation war memorial to attack white farmers.
PRES. ROBERT MUGABE, ZIMBABWE: You are now our enemies, because you really have behaved as enemies of Zimbabwe.
COEN: Here in Southwest Zimbabwe's ranching country, the still smoldering ruins of the farmhouse where the latest victim of Zimbabwe's violence over land was killed. Local farmers say farmer Martin Olds was shot by a gang of more than 40 government supporters, who stormed his homestead and then set it ablaze. A memento of happier times lies on the floor. His mother is angry.
GLORIA OLDS, VICTIM'S MOTHER: We're all Zimbabweans here, as far as I know. For 20 years we've all been Zimbabweans. What difference does your color make?
COEN: Since February, hundreds of white-owned farms have been occupied by war veterans and other government supporters demanding the land be handed over to them. Critics of the government say President Mugabe is using the land issue to score points ahead of upcoming elections.
MUGABE: We can understand the frustrations of the war veterans.
COEN: Many here were disappointed when the president failed to appeal for an end to the violence in his televised independence address to the nation.
DAVID HASLUCK, DIR., COMMERCIAL FARMERS UNION: When will the violence perpetrated by war veterans who are acting outside the law be stopped? There is only one person who can do that, and that is the president. If he says stop, I believe they will stop.
COEN: The growing violence has put a damper on this year's independence anniversary.
(on camera): Zimbabwe's national stadium is usually packed on independence day, this year the stadium is virtually deserted. The Zimbabwean government decided to cancel all independence day celebrations countrywide.
UNIDENTIFIED MALE: I don't know what we are celebrating, because there's not a lot to celebrate at the moment.
COEN (voice-over): For some, the public holiday was just another opportunity to relax. News of the latest racial violence darkened the mood.
UNIDENTIFIED MALE: We have to be friends, brothers, and sisters. I think that's the only solution.
COEN: But the president's latest comments suggest the battle for land is far from over. For many, this day will be a bitter independence anniversary.
Bob Coen, CNN, Harare, Zimbabwe.
HAYNES: Monday was the deadline to file income tax in the United States this year. The normal deadline is April 15, which fell on Saturday, so taxpayers got an extra couple of days this year to file their taxes.
Now, according to the IRS, or Internal Revenue Service, more than a third of the returns filed were sent in during the last few days leading up to the deadline.
Taxes are the topic of today's "Business Desk." The federal income tax is authorized by the XVI Amendment of the U.S Constitution, and gives Congress the power to lay and collect taxes on income. In most U.S. states, you're taxed by both the U.S. government and the state. They base this tax on what you earn.
Then there's the sales tax paid on most things you buy. The amount varies from state to state. And now there's talk of yet more taxes in this age of high technology, as Charles Zewe explains.
CHARLES ZEWE, CNN CORRESPONDENT (voice-over): With $30,000 borrowed from family and friends, Igogolf.com five years ago began selling golf gear online. Sales this year may top $30 million, most of it tax free to out-of-state buyers.
DAVID SCHOFMAN, FOUNDER, IGOGOLF.COM: It doesn't make sense to buy it anywhere else. It really doesn't.
ZEWE: Igogolf's 27-year-old founder says if he'd had to collect sales taxes, it could have crippled his young company.
SCHOFMAN: It would have been a tremendous expense, and we maybe wouldn't have been able to even get off the ground.
INGRID OLER, INSTANT REPLAY GOLF: You just pay tax on the difference, basically.
ZEWE: But Ingrid Oler, who runs a nearby golf shop, says Internet tax exemptions are unfair.
OLER: When you're doing it at the expense of another sector, I think that that's kind of discriminatory.
ZEWE: Economists estimate states lost $1 billion in tax revenues last year. In three years...
WILLIAM FOX, UNIVERSITY OF TENNESSEE: By that point in time, the state and local governments together would lose about $20 billion.
ZEWE: To Dallas Mayor Ron Kirk, that could mean cuts in services.
MAYOR RON KIRK, DALLAS, TEXAS: The Internet shopper still needs public schools and public roads and police and fire protection and probably wants well-maintained parks and libraries. And those things cost money.
ZEWE: A federal advisory panel is recommending Congress permanently ban taxes on access to the Internet and extend for another five years a moratorium on any new Internet taxes. The group also says lawmakers for the time being should refrain from trying to apply state sales taxes to online purchases.
GOV. JAMES GILMORE (R), VIRGINIA: This is a chance for working men and women, for small businesses to have a chance to grow and to flourish.
ZEWE: Utah Governor Mike Leavitt, however, says a tax-free net will drive up property and income taxes.
GOV. MICHAEL LEAVITT (R), UTAH: A level playing field simply means you may hate taxes, we all do, but if you have to have them, at very least they ought to be fair. ZEWE: Ingrid Oler now has her own Web page, but says net competitors have an edge.
OLER: It would affect me if I could spend $80 less on a $1,000 set.
ZEWE: Igogolf, meanwhile, is taking that to the bank. It's just been sold to a new sports retail Web site for $150 million.
Charles Zewe, CNN, Dallas.
WALCOTT: In our "Desk Extra," the ups and downs of the U.S. economy. Whether you're a casual observer or a big-time investor, trying to gauge the market's behavior could be anyone's guess. Take last week's tumble of the Dow and Nasdaq markets. Does that kind of gyration indicate bad times ahead?
Brooks Jackson takes a closer look.
BROOKS JACKSON, CNN CORRESPONDENT (voice-over): The real economy is still booming. Consumer spending still rising. Business still hiring. Corporate profits still going up. Can the big drop on Wall Street kill the longest boom in U.S. history?
ALLEN SINAI, CHIEF ECONOMIST, PRIMARK DECISION ECONOMICS: Well, I don't really think this kind of decline will kill the economy. I think the right word is "dent."
JACKSON: And some say a "dent" in the economy is not a bad thing. On the way up, stock prices created what economists call a "wealth effect," threatening to overheat the economy.
ALAN GREENSPAN, CHAIRMAN, FEDERAL RESERVE: The sharp rise in the amount of consumer outlays...
JACKSON: For every dollar of new stock wealth, economists estimate, three to five cents has translated into added consumer spending. And Alan Greenspan estimates, that has added one full percentage point to the nation's overall economic growth, per year. But the wealth effect is not likely to become a poverty effect.
WILLIAM QUAN, AUBREY G. LANGSTON CO.: Well, I think in the real economy, the first things that you will see is big-ticket item purchases slow down; things like automobiles, homes, second car, the swimming pool, the extra sailboat -- things like that.
JACKSON: Investors have lost an estimated $2 trillion in paper wealth since the market peaked.
SINAI: When people lose money on paper, it does hurt their confidence, it does shake them up some; not as much as when they lose a job. That, really, is what has the biggest effect on consumption. JACKSON: And few jobs are in jeopardy. Some money-losing dot.com companies may stop hiring if stock funding dries up. But overall, jobs are plentiful. Business complains of a labor shortage. Inflation pressures are building. So lower stock prices could be just what the doctor ordered.
QUAN: I think, in the long run, I think it is a good thing .
SINAI: In the long run it's healthy.
JACKSON: Example: real estate. Sales of vacation homes are threatened by the reverse wealth effect. But all homes could be more affordable if inflation fears ease and mortgage rates level off.
(on camera): And the market is still higher than it was a year ago. Economists say it would have to drop a lot more to strangle growth in the real economy.
Brooks Jackson, CNN, Washington.
HAYNES: Now, coming up in "Chronicle," His business plan flopped in graduate school, but that didn't stop this entrepreneur from turning a bad grade into the right stuff in cyberspace.
ANNOUNCER: Teachers, make the most of CNN NEWSROOM with our free daily classroom guide to the program. There you'll find a rundown of each day's show so you choose just the program segments that fit your lesson plan. Plus, there are discussion questions and activities, and the guide highlights key people, places and news terms. Each day find hot links to other online resources and previews of upcoming desk segments. It's all at this Web address where you can also sign up to have the guide automatically e-mailed directly to you each day. It's easy, it's free, it's your curriculum connection to the news. After all, the news never stops, and neither does learning.
WALCOTT: We're strictly business in "Worldview" today. We'll travel across Asia to learn about money matters large and small. In Bangladesh, we'll meet the telephone woman, an entrepreneur who has her neighbors dialing for dollars. Her initiative is an inspiration to others who hope to build a business. Then in India, we meet students cashing in on the generosity of a New York cab driver. And in Iraq, we learn about potential profits as businessmen bargain on the future.
ANDY JORDAN, CO-HOST: It's been 10 years since Iraq invaded Kuwait, touching off the Persian Gulf War. That was when the United Nations instituted crippling sanctions against Iraq. While the U.N. has allowed the country to sell oil for food, it has refused to lift embargoes until the Iraqi government proves that it has done away with its weapons of mass destruction and the means to produce them. As oil trickles out of Iraq, businessmen are trickling in.
Jane Arraf has their story.
JANE ARRAF, CNN CORRESPONDENT (voice-over): With Iraq effectively under air embargo, a 10-hour bus trip from Jordan is just the beginning. There's the constant waiting. And while checking into the government's showcase hotel is relatively easy, checking out is something else: You can't charge a stay to your American Express, but an increasing number of businessmen from a growing list of countries are making the trek.
Austria has come back after a nine-year absence. While Austrian executives discuss how to sell more goods to Iraq under the oil-for- food program, the Austrian government is busy upgrading its embassy here.
MARIUS CALLIGARIS, AUSTRIAN FOREIGN MINISTRY: We've always said it's wrong to isolate a country, might it be Iraq or whatever other country. If you don't speak to a country, you don't make it better.
ARRAF: Even companies that can't legally do business now with Iraq because of sanctions are getting their foot in the door. This Italian businessman sells industrial machinery to polish building stone.
PIETRO ZANPERIN, ITALIAN BUSINESSMAN: We are here now because we think that this time has come, that the embargo will go away, and then we are just putting the first step to come back again to market.
ARRAF: Although the government's Rashid Hotel is brimming with business people, there are still very few Americans or Britons walking through these doors. But there are a few American partners.
This Italian affiliate of a major U.S. company is hoping to sell oil industry spare parts.
REMO RAVIOLA, BAKER PROCESS: For a long time, our corporate policy was not to come to Iraq anyway. So now the policy in U.S. has changed.
ARRAF: And Iraq recently lifted a ban on purchases from U.S.- based companies, inviting in American suppliers of rice, tires and trucks.
MOHAMMED MEHDI SALEH, IRAQI TRADE MINISTER: We are differentiating between American companies and American people and between American policy.
ARRAF: Almost all of Iraq's billions of dollars in contracts still go to countries in favor of lifting sanctions. Still officially on Iraq's trading blacklist:
SALEH: Definitely United States and Britain; still Japan.
ARRAF: Cutting a deal in Baghdad, though, is just the first step.
KLAUS PETER STELZER, AUSTRIAN BUSINESSMAN: After applying to the Austrian ministry, the Austrian minister then applies to the U.N.- Austrian delegate in New York. The U.N.-Austrian delegate in New York then contacts the American equivalent for Iraq in New York. He then decides whether we get permission or not, and then he comes all the way back.
ARRAF: An that's just to sell cheese.
(on camera): If sanctions are ever lifted, businessmen here now hope Iraq will remember they came during the hard times.
Jane Arraf, CNN, Baghdad.
WALCOTT: The South Asian nation of Bangladesh was once the eastern half of Pakistan. But a nine-month-long civil war divided Pakistan in two, and in 1971 Bangladesh was born. Since gaining independence, serious overcrowding and widespread poverty have plagued the country, which is home to over 134 million people. But now small businesses in Bangladesh are getting a boost, thanks to a program called micro-credit.
Kelly Wallace looks at one success story.
KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT (voice-over): Her neighbors call her the "telephone lady." Anwara, a mother of four with no formal education, is looking for customers. She rents out her cell phone to villagers who want to make local and international calls.
This woman asks if Anwara will lower her bill. Anwara says no with a smile, telling her neighbors this is a business.
Fourteen years ago, she and her husband barely had enough to eat, so Anwara got a loan from the Gramin Bank in Bangladesh to buy a milking cow. Several loans later, Anwara was able to build up her home from a shack to this. And three years ago when her husband died of cancer, the bank gave her $400 to buy a cell phone.
ANWARA BEGUM, LOCAL ENTREPRENEUR (through translator): You can easily understand, if I had not this business, I cannot send my children to the -- for education.
WALLACE: Her profits will help her send her daughter to law school and her son to study medicine. Anwara earns between $100 and $200 U.S. a month in a place where the average salary is $280 a year.
(on camera): Anwara is one of 2.4 million Bangladeshis living in villages like this one, taking out loans to open up small businesses, and 95 percent of those businesses are run by women.
(voice-over): Anwara says business success can lead to changes at home.
BEGUM (through translator): If she can earn 10 taka and her husband earn 10 taka, then she have equal rights for decision-making and other things in the family.
WALLACE: Anwara's been able to buy a television, cots and a refrigerator for her family. She's on her way to living a better life. And she has this advice for other women here:
BEGUM (through translator): You can take also loan from Gramin Bank and you can invest it in many businesses, like small shops or poultry or other things. And if you can work hard, you can change your conditions.
WALLACE: Kelly Wallace, CNN, near Dhaka, Bangladesh.
RUDI BAKHTIAR, CO-HOST: India is one of the most densely populated countries in the world. The education and wealth of its people varies widely. While India has a growing number of engineers and scientists, about half of the adult population is illiterate. Many kids drop out of school around age 10. Some go to work on the family farm, others get jobs to help support their families. Each year, an estimated 30,000 Indians migrate to the U.S. in search of better jobs and lives. One Indian immigrant in New York is working not only to improve his life, but is reaching out to help others back home.
Satinder Bindra has his story.
SATINDER BINDRA, CNN CORRESPONDENT (voice-over): Like clockwork every morning, the tiniest residents of Doobher Kishanpur bring their community to life. They sing patriotic songs unaware they're very lucky to go to school in a country where millions of children still can't get an education.
Some of these students also don't know it's a New York cabbie, Om Dutta Sharma, who scrapes his tips and sends the money back to his former village to fund the school.
OM DUTTA SHARMA, NEW YORK TAXI DRIVER: In my village, for example, the people think that something has come from heaven for their daughters, and there's a big line now for the parents to put their daughters into this school.
BINDRA: Sharma has donated his former home to the school. Here, 180 girls up till the age of 11 learn to read and write.
UNIDENTIFIED FEMALE (through translator): We are taught to respect elders, not to hurt them. We are also taught to love those younger than us.
BINDRA: Many of these children come from poor families. Sharma buys them their uniforms and books.
O. SHARMA: Money is nothing. Why not I leave some legacy behind me so that the people, those who are coming behind me, following me, may respect that legacy.
BINDRA: Sharma's so committed to his school, his wife complains he neglects his own family.
KRISHNA SHARMA, WIFE OF OM DUTTA SHARMA: It's true. In 20 years, we didn't go out even once.
BINDRA: The Sharmas are so financially strapped they borrowed $50,000 to put their own two children through school.
K. SHARMA: He was really devoting the time and the money to the school, and it looked like I was a single parent.
BINDRA: Despite all the hardship she's endured, Krishna Sharma says she's proud of her husband. Sharma is now expanding the school so 500 girls can get a high school education.
(on camera): Once again, he's not asking anyone for help. He says he'll donate some land and even sell his New York taxi medallion to give children here a better life.
Satinder Bindra, CNN, Doobher Kishanpur, North India.
ANNOUNCER: You're watching CNN NEWSROOM, seen in schools around the world, because learning never stops, and neither does the news.
HAYNES: Don't kid yourself: It's a brave new world of dot.coms out there -- Amazon.com, eBay.com, Buy.com. So where should you point and click? Well, four years ago, an Iranian immigrant asked the same question, and his answer has put his Web site on the map in the world of cyberspace.
NEWSROOM's Rudi Bakhtiar introduces us to BizRate.com.
BAKHTIAR (voice-over): This is the headquarters of BizRate.com, one of the latest Web sites to take cyberspace by a storm. It reflects the excitement of the Internet era: youth, energy, enthusiasm, innovation, qualities shared by the mastermind of BizRate himself. Meet chairman, chief strategist and co-founder of BizRate.com, Farhad Mohit. He's one of the many young faces lending his creativity to the ever-expanding world of dot.coms.
FARHAD MOHIT, CHAIRMAN & CO-FOUNDER, BIZRATE.COM: What I was thinking about was, how do you bring the power of the Web for commerce to each individual consumer?
BAKHTIAR: A simple idea that, interestingly, Mohit came up with years ago in graduate school at a time when e-commerce was barely existent.
MOHIT: I was looking at the Web. It seemed like an incredible thing for information. It brought you the entire information of the universe to the fingertips, right?
BAKHTIAR: It was then at Wharton Business School, one of the most prestigious graduate schools in the U.S., that he and a few classmates wrote up an 80 page business plan for his idea -- a plan that would later serve as the blueprint for BizRate.com. However, Mohit's professor was not impressed.
MOHIT: We got a P. P is the lowest grade you could possibly get.
BAKHTIAR: But Mohit wasn't about to let a bad grade get in the way of his dream. After graduation, he and BizRate co-founder Henri Asseily returned to Los Angeles to realize their dream. Four years and thousands of hardworking-hours later, they're riding the wave of the future. Just ask chief executive officer Chuck Davis.
CHUCK DAVIS, CEO, BIZRATE.COM: The Nielsen//NetRatings came out and we are the third fastest growing site on the Web in the forth quarter.
BAKHTIAR: And it doesn't end there. This January, BizRate surpassed Yahoo! shopping, becoming the second-biggest online marketplace right behind AOL. No loss of smiles at this company meeting. But what does BizRate do?
MOHIT: What we do is we sit on the point of sale of over 3,000 vendors on the Web, letting every single customer tell us what they think about their experience.
BAKHTIAR: BizRate literally does as their name says. Based on consumer responses, they rate the reliability of businesses on the Web.
Robert Kibble was one of the first to recognize BizRate's potential.
ROBERT KIBBLE, INVESTOR, MISSION VENTURES: It's the sort of antidote to Amazon.com.
BAKHTIAR: He put his money where his mouth is, investing over $10 million in the company.
KIBBLE: Farhad is an amazing guy. I mean, he's just -- he's got incredible dynamism, he's very smart, and he's got vision. If I could bottle up Farhad and take him somewhere and replant him as an entrepreneur in some other, you know, large market opportunity, I'd love to do it.
BAKHTIAR: So far, Mohit's success has not changed him. He still lives in the same scant house, still no food in the fridge, still hangs out with the same crowd, and doesn't even own his own set of wheels. But then when you're riding the wave of the future, who needs wheels?
Rudi Bakhtiar, CNN, NEWSROOM.
HAYNES: Just another success story in the world of cyberspace.
WALCOTT: Oh, yes. Sounds like his business is booming.
And I'll tell you something else that's booming: The Hispanic population around America. In fact, by the year 2005, Hispanics are expected to make up the largest single minority in the nation.
HAYNES: That's right. And starting May 1, we will rerun our special series, "Viviendo en America," which tackles some of the major issues facing the United States during this transformation.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I don't think that we're trying to take over. I think we're trying to blend in in a way, and we're just, I mean, contributing to the culture, to the country.
(END VIDEO CLIP)
HAYNES: And that's May 1. Be sure to catch it.
WALCOTT: And we'll see you tomorrow. Bye-bye.
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